Targeted support and regulated financial advice serve different customer needs through distinct regulatory frameworks. Understanding the differences helps firms choose appropriate service models and deliver compliant, cost-effective support.
Core Regulatory Distinctions
Targeted support and regulated advice operate under separate FCA frameworks with different requirements and obligations.
Regulatory basis for advice comes from COBS 9, which mandates personal recommendations based on comprehensive customer assessment. Advisers must consider all relevant circumstances and ensure recommendations are suitable.
Targeted support framework introduced through the Advice Guidance Boundary Review allows personalised suggestions to customer groups without individual suitability assessments. The FCA creates lighter-touch requirements than full advice.
Liability differences affect firm exposure to claims and complaints. Regulated advice carries responsibility for ensuring recommendations suit individual circumstances. Targeted support carries different obligations focused on segment appropriateness.
Consumer Duty applies to both but with adapted expectations. Both must deliver good outcomes, but assessment methods and evidence requirements differ.
One compliance officer summarised the distinction as “advice asks ‘is this right for you specifically?’ whilst targeted support asks ‘is this right for people like you?'”
Customer Assessment Requirements
The depth and scope of customer assessment differs substantially between targeted support and regulated advice.
| Assessment Element | Regulated Advice | Targeted Support |
|---|---|---|
| Fact-finding depth | Comprehensive personal circumstances | Sufficient for segment assignment |
| Time required | 45-90 minutes typical | 15-30 minutes typical |
| Information gathered | Complete financial position, goals, risk profile | Key characteristics for grouping |
| Ongoing updates | Full review at regular intervals | Updates when circumstances change significantly |
| Documentation | Detailed fact-find, suitability report | Segment assignment, suggestion record |
Regulated advice fact-finding explores income, expenditure, assets, liabilities, existing provisions, dependants, employment, health, goals, risk tolerance, investment experience, knowledge and capacity for loss. This comprehensive assessment supports individual recommendations.
Targeted support assessment gathers information sufficient to assign customers to appropriate segments. Firms need enough detail to determine which group the customer belongs to but not complete financial circumstances.
Documentation requirements reflect assessment depth. Advice requires detailed fact-finds and suitability reports. Targeted support needs records showing segment assignment rationale and suggestions provided.
Recommendation Types and Limitations
What firms can recommend differs between targeted support and regulated advice.
Regulated advice allows personal recommendations on any appropriate product or solution based on individual circumstances. Advisers can suggest complex strategies, multiple products and tailored approaches.
Targeted support provides suggestions suitable for customer segments rather than individuals. Recommendations focus on products and strategies meeting common needs within groups.
Product complexity restrictions may apply to targeted support. The FCA expects targeted support to cover straightforward products and situations rather than complex advice needs.
Holistic planning remains the domain of regulated advice. Comprehensive financial planning considering all aspects of circumstances typically requires full advice assessment.
Example applications show the distinction clearly. Targeted support might suggest workplace pension contribution levels based on age and salary band. Regulated advice would assess individual circumstances including existing provisions, goals, health and capacity for loss before recommending specific contribution rates.
Delivery Models and Processes
How firms deliver targeted support versus regulated advice affects efficiency and scalability.
Regulated advice typically involves one-to-one adviser-client relationships with personalised service throughout. Advisers conduct comprehensive assessments, develop individual recommendations and maintain ongoing relationships.
Targeted support enables one-to-many delivery where firms develop suggestions for customer segments and apply them to individuals within those groups. This scales more efficiently than individual advice.
Technology integration proves more critical for targeted support. Automation, decision trees and AI enable cost-effective delivery at scale. Regulated advice uses technology but relies more heavily on adviser expertise.
Human interaction requirements differ. Regulated advice almost always includes direct adviser-client engagement. Targeted support may use digital delivery with optional human support.
Processing time reflects complexity differences. Regulated advice from initial meeting through recommendation delivery typically requires 2 to 4 hours adviser time. Targeted support might complete in 30 minutes to 1 hour.
One firm offers both services using senior advisers for regulated advice and trained support staff with decision support systems for targeted support. This staffing model reduces cost whilst maintaining appropriate expertise.
Fee Structures and Economics
Pricing models for targeted support versus regulated advice reflect different cost structures and value propositions.
Regulated advice fees typically range from ÂŁ1,000 to ÂŁ3,000 for initial advice depending on complexity. Ongoing advice costs 0.5% to 1% of assets annually. These fees reflect comprehensive assessment and personalised recommendations.
Targeted support pricing must be lower to serve mass market consumers. Fees might range from ÂŁ100 to ÂŁ500 or be embedded in product charges. Lower costs enable profitable service for smaller investment amounts.
Minimum investment thresholds differ substantially. Regulated advice firms often require ÂŁ50,000 to ÂŁ100,000 investable assets. Targeted support serves consumers with ÂŁ5,000 to ÂŁ50,000 or less.
Volume economics make targeted support viable. Whilst individual fees are lower, serving many more customers generates acceptable revenue. Technology reduces per-customer costs.
Revenue models for targeted support often embed fees in products rather than charging separately. Research shows mass market consumers resist standalone advice fees but accept product-embedded costs.
Foresters Financial demonstrates basic advice viability serving customers with a tenth of assets compared to holistic advice firms through efficient processes and appropriate fee structures.
Regulatory Obligations and Compliance
FCA requirements differ for targeted support and regulated advice affecting compliance burdens.
COBS 9 suitability rules apply fully to regulated advice. Firms must assess suitability, document reasoning and provide suitability reports meeting specific requirements.
Targeted support obligations focus on segment appropriateness rather than individual suitability. Firms demonstrate that suggestions meet common needs within customer groups.
Record-keeping requirements for advice include comprehensive fact-finds, suitability reports and ongoing review documentation. Targeted support requires records showing segmentation rationale and suggestions provided.
Ongoing monitoring for advice means regular reviews ensuring recommendations remain suitable as circumstances change. Targeted support monitoring verifies that segment-based suggestions deliver good outcomes.
Complaint handling differs as advice complaints often centre on whether recommendations suited individual circumstances. Targeted support complaints may focus on whether segment assignment was appropriate.
One compliance team managing both services reports that targeted support compliance is less complex but still requires robust processes ensuring appropriate segmentation and suggestion quality.
Staff Qualifications and Training
Different qualification and skill requirements apply to staff delivering targeted support versus regulated advice.
Regulated advice requires advisers to hold appropriate qualifications typically including Diploma in Regulated Financial Planning or equivalent. Experienced advisers need deep product knowledge and sophisticated analytical skills.
Targeted support staff need fewer qualifications as they work within defined frameworks using decision support tools. Training focuses on customer segmentation, applying group suggestions and identifying when customers need full advice.
Experience requirements reflect complexity. Senior advisers handle regulated advice especially for complex cases. Less experienced staff can deliver targeted support effectively with proper training and systems.
Supervision and oversight for targeted support ensures staff apply segmentation correctly and provide appropriate suggestions. Quality assurance monitors outcomes and identifies training needs.
Career progression may see advisers start with targeted support delivery, gain experience and progress to regulated advice. This provides development pathways whilst meeting market needs.
Technology Enablement
Technology plays different roles in targeted support versus regulated advice delivery.
Regulated advice uses technology for research, analysis and documentation but relies primarily on adviser expertise. CRM systems, planning software and compliance tools support advisers.
Targeted support depends heavily on technology for cost-effective delivery. Customer segmentation algorithms, decision support systems and automated suggestion generation enable scale.
AI integration proves particularly valuable for targeted support. Systems trained on financial services can analyse customer data, assign segments and generate appropriate suggestions efficiently.
Decision trees guide staff through targeted support processes ensuring consistency. Advisers apply professional judgement throughout regulated advice.
Automation levels differ substantially. Regulated advice automates documentation and research but not recommendation development. Targeted support can automate segment assignment and suggestion generation.
One firm using AI-powered targeted support processes 10 times more customers per staff member than their regulated advice service whilst maintaining quality outcomes.
Consumer Protection Considerations
Both targeted support and regulated advice must protect consumers appropriately but through different mechanisms.
Suitability standards for advice require recommendations suit individual circumstances comprehensively. Firms demonstrate through detailed fact-finding and analysis that suggestions are appropriate.
Segment appropriateness for targeted support requires suggestions meet common needs within customer groups. Firms show that grouping methodology is sound and suggestions are suitable for segments.
Clear communication ensures customers understand what service they receive. Targeted support requires explaining that suggestions are based on group characteristics, not individual assessment.
Vulnerable customer provisions apply to both. Regulated advice identifies vulnerability through comprehensive assessment. Targeted support must recognise when customers need additional support or full advice.
Complaints procedures provide recourse if services fail. Both targeted support and regulated advice complaints receive fair assessment though evaluation criteria differ.
When to Use Each Approach
Choosing between targeted support and regulated advice depends on customer needs and circumstances.
Regulated advice suits customers with complex situations including multiple financial goals, large investment amounts, sophisticated products, protection needs, pension transfers and holistic planning requirements.
Targeted support works well for straightforward needs including workplace pension guidance, ISA selection, basic investment allocation, simple protection products and retirement planning basics.
Customer characteristics influence choice. Mass market consumers with modest investable amounts benefit from targeted support. High net worth individuals with complex estates need regulated advice.
Firm capabilities affect what services firms can offer economically. Targeted support requires appropriate technology and processes that not all firms possess initially.
Strategic positioning determines whether firms focus on one approach or offer both tiers serving different market segments.
Transition Between Services
Well-designed frameworks allow customers to move between targeted support and regulated advice as needs evolve.
Referral pathways from targeted support to advice help customers recognise when their situations require more comprehensive assessment. Decision support systems flag complexity indicators triggering referral suggestions.
Customer journey mapping shows progression from guidance through targeted support to full advice as circumstances and needs become more sophisticated.
Data continuity ensures information gathered for targeted support transfers efficiently when customers move to regulated advice. This avoids duplicating assessment work.
Pricing transparency helps customers understand cost differences and make informed choices about appropriate service levels.
One advice firm reports that 15% of targeted support customers eventually transition to regulated advice as their financial situations become more complex or investment amounts grow.
Future Evolution
The relationship between targeted support and regulated advice will evolve as markets mature.
Regulatory refinement will clarify boundaries and requirements as the FCA monitors implementation and outcomes.
Technology advancement will improve targeted support capabilities making segment-based suggestions more sophisticated and personalised.
Consumer understanding will develop as customers experience different service tiers and learn which approaches suit their needs.
Market innovation will produce hybrid models blending targeted support and advice elements in novel ways.
Frequently Asked Questions
Can firms offer both targeted support and regulated advice? Yes. Many firms plan multi-tier strategies serving different customer segments appropriately through various service levels.
Is targeted support legally advice? No. Targeted support operates under separate FCA framework with different requirements than regulated advice under COBS 9.
What happens if a customer receiving targeted support needs regulated advice? Firms should have referral pathways identifying when customer circumstances require more comprehensive assessment and transition processes to full advice services.
How do professional indemnity insurance costs differ? Insurance costs reflect different risk profiles. Targeted support may have lower premiums than regulated advice though this is still being established as the market develops.
Learn how Aveni enables efficient delivery of both targeted support and regulated advice →
